Coronavirus could cause smartphone sales to hit 5-year low

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Coronavirus is a major disruptor when it comes to smartphone sales.
Photo: Ste Smith/Cult of Mac

Smartphone production — and, therefore, sales — could hit their lowest point in five years as a result of the coronavirus, a new report claims.

According to analysis by TrendForce, detailing the impact of coronavirus on the tech industry, smartphone production will shrink by 12% this quarter due to the outbreak. The shortage of component manufacturing elsewhere in the supply chain could mean that shortages persist through the April to June quarter as well.

Overall, the report claims that 2020 smartphone production is projected to reach 1.381 billion units. That’s a 1.3% decline and the lowest output since 2016. Furthermore, TrendForce notes that “it is entirely possible” that overall production falls below this number.

Smartphones aren’t the only product category that’s suffering with the outbreak of coronavirus. Smart speakers, video games consoles, automobile production, and more is also affected as a result of the outbreak of the virus, which has so far killed more than 1,700 people.

Interestingly, the report notes that Samsung’s memory chip production facilities are unlikely to be badly affected. That is because semiconductor fabrication plants are “highly automated, with very low demands for manpower.”

The impact of coronavirus on smartphone sales

Apple has already been impacted by the spread of the novel coronavirus, known as COVID-19. On Monday, Apple issued a statement saying that its previous guidance on quarterly revenue is now likely to be wrong. During its January earnings call, Apple projected March quarter revenues of $63 billion to $67 billion. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” Apple said in a statement published on its website.

In addition to disruption on the manufacturing side, Apple Stores have also been closed in China. While a select few have reopened, this is still likely to have a big impact on overall sales.

Tim Cook has previously talked about China being Apple’s biggest future market. As its main manufacturing country, too, that means that the impact of coronavirus is doubly hurting Apple — as well as the overall electronics industry.

Of course, this impact is nothing compared to the human toll of the virus. With more than 2x the number of casualties who died during the previous SARS coronavirus, this is a healthcare emergency. To combat the spread of coronavirus, Tim Cook yesterday told Apple employees that Apple is doubling the amount of money it has donated to the cause.

Source: TrendForce